6-figure pay for care plan overseers

Salaries at new state agency stir concern

By Andrea Estes, Globe Staff | January 27, 2007

Employees of the new state agency established to provide health insurance to the state's low-income residents have been hired at an average salary of $111,000 a year, with 12 of the 22 staff members making more than $100,000 and six earning more than Governor Deval Patrick and his Cabinet secretaries.

The state's landmark universal healthcare law, approved last year to provide affordable coverage to the state's approximately 500,000 uninsured residents, has created a bureaucracy with a salary scale like that of the Massachusetts Turnpike Authority or the Massachusetts Port Authority, two quasi-independent agencies that Patrick and former governor Mitt Romney have railed against for their overly generous compensation packages.

With the agency struggling to provide the affordable premiums the legislation promised, some community leaders and lawmakers involved in the program's development said they were surprised by the salaries, which are being paid initially through a $25 million appropriation by the Legislature. Eventually the Commonwealth Health Insurance Connector's administrative costs will be funded by insurance companies through a surcharge on premiums.

"I am going to call in the director and find out where they're spending the money," said House Speaker Salvatore F . DiMasi, one of the architects of the legislation. "We don't want administrative costs to be too high. We want the money spent efficiently."

Senator Richard Moore, who helped shepherd the bill through the Legislature, said : "If they're paying large salaries, the $25 million isn't going to last long."

A spokesman for the Connector said the salaries reflect "each individual's ability, experience, and responsibilities.

"People who have come to work at the Connector did so to be involved in something exciting, challenging, and historic, and for some that means earning less," said Richard Powers, the Connector's director of public affairs, who pointed out that five of the eight senior staff members are making less than they did at their previous jobs.

He said most of the employees had an extensive background in the health insurance industry.

Under the health insurance law, approved last April, all adults must obtain insurance coverage by July 1 or pay a penalty, unless they secure a waiver by proving they can't afford insurance.

The law established the Connector, which has a staff of 22 employees and is overseen by an unpaid 10-member board.

Last week, the board postponed a vote to set minimal coverage requirements, after learning that it could cost the average individual $380 a month.

The Connector's executive director, Jon Kingsdale, who earns $225,000 a year, determined the compensation for other employees.

The second-highest paid, deputy director Rosemarie Day, was hired at $195,000 a year, but her salary was reduced to $175,500 when she opted for a four-day week.

Some members of the 10-member board that oversees the Connector were also surprised when Kingsdale informed them of the high salaries and administrative costs, including a recently awarded $4 million advertising contract to educate the public, according to one board member.

"We had to go with the people he chose," said the board member, who spoke on condition of anonymity because members are not authorized to speak to the media. "We didn't have time for people to learn on the job. We needed people who at least understood the industries they were dealing with. The real problem is the industry pays their folks really high, and to get them to come over -- they're not going to do it for a huge wage cut."

Ultimately, under the state's plan, insurers will fund the salaries and other administrative expenses by paying a surcharge of 4 to 5 percent on the premiums they collect as a result of the program. Some have raised concerns that insurers will pass along the cost to consumers in higher premiums.

"The cost of the salaries will be part of the cost of the insurance, " asserted David Tuerck, executive director of the Beacon Hill Institute, a conservative think tank.

"The Connector was created to take the cost off budget and put it onto the insurance companies," he said. "I would describe [the surcharge] as a disingenuous attempt to mask the cost of healthcare reform."

A spokesman for the Massachusetts Association of Health Plans was not available to comment on the surcharge.

Several lawmakers said that they did not intend to create a cumbersome new bureaucracy when they passed the landmark law.

According to DiMasi, the House specifically pressed to make the Connector a state agency, part of the Secretariat of Administration and Finance, so it would be directly accountable to the governor.

Others, particularly members of the Senate, argued that the Connector should be independent so it could have more flexibility in hiring and compensation.

The 10-member board is composed of four state officials, three appointed by the governor and three by the attorney general.

Eric Fehrnstrom, a spokesman for Romney, said the former governor pushed for an independent authority because it was the most efficient way for uninsured employees to buy health insurance on a pretax basis.

"The quasi-governmental entity structure was selected due to the singular mission of the Connector, which is to maximize the number of people with insurance," Fehrnstrom said. "No other state agency is tasked with this assignment."

John McDonough, executive director of Health Care for All and a former state representative, said he does not believe the compensation is too high.

"Compared to what people make in state government, these salaries are high, but not compared to what comparable people make in a commercial insurance world," he said. "If they didn't pay these salaries, I don't believe they would be getting the quality people they need to do this highly complex operation."

But McDonough cautioned that the financial underpinnings of the system are so precarious that the Connector may not be able to sustain itself as envisioned.

"The whole structure is fraught with uncertainty," he said. "This is a challenging task requiring a lot of thoughtful delicate balancing to make the coverage favorable enough so people want it and affordable enough so people can buy it.

"If they fail to do that and people don't buy the policies, they won't have the revenue to support the operation."

A spokesman for Patrick, whose salary is $140,535 a year, declined comment on Connector salaries.

(Correction: Because of a reporting error, Rosemarie Day's work schedule was misstated in a Page One story Saturday about the salaries paid to employees of the state agency implementing the universal healthcare law. Day, who earns $175,500 annually, alternates between four-day work weeks and five-day work weeks.)